Fostering Sustainable Entrepreneurship: How the Urban Business Environment Shapes the Entry of Newborn Digital Enterprises—Evidence from 35 Major Cities in China

In the context of the digital economy as a driver of economic transformation, digital enterprises have become pivotal actors in value creation and innovation. A conducive business environment is essential for enhancing productivity, competitiveness, and the long-term resilience of entrepreneurial ecosystems. However, the mechanisms through which this environment influences the entry of newborn digital enterprises, a core indicator of sustainable economic activity, remain inadequately explored. This paper develops a government-led business environment index based on three dimensions: the legal environment, the governmental affairs environment, and public services. Using panel data from 35 major Chinese cities spanning 2016 to 2020, we employ a negative binomial regression model to examine how both the overall business environment and its sub-dimensions affect the entry of newborn digital enterprises. The findings reveal that an overall improvement in the urban business environment significantly promotes the entry of newborn digital enterprises and that all three sub-dimensions, namely the legal environment, governmental affairs environment, and public services, collectively facilitate this process. The principal implication is that local governments should focus on the balanced optimization of all business environment elements. Such policies not only stimulate digital startup formation but also contribute to high-quality, resilient, and economically sustainable urban development.